LIVE MORTGAGE-FREE

 BY NORA HESTON TARTE

Living without a mortgage, especially in your golden years, feels like a dream come true. But it can’t possibly be a reality, can it? Actually, a reverse mortgage allows qualified homeowners to forgo their monthly mortgage by turning their home equity into cash.

In order to qualify for a reverse mortgage, homeowners must meet three main criteria: be at least 62 years old living in the home as your primary residence, have sufficient home equity, and participate in an independent educational counseling session held by an approved HUD counselor.

Essentially, a reverse mortgage works by converting home equity into cash and then using that cash to “pay” your monthly mortgage until you leave the home. This is a great opportunity for homeowners who have secured a lot of equity over the years and those who plan to move out of their primary residence at some point in the not-too-distant future. The benefit is that the reverse mortgage doesn’t get paid back month by month like a regular mortgage would. Instead, the loan balance accumulates interest and fees over time that are added to the overall balance. The homeowner is only responsible for paying property taxes and insurance, as well as upholding the terms of the home loan. The loan payment then becomes due when you vacate the home, so you can pay it off using the profits from selling.

The cash equity can be dispersed as monthly payments, a line of credit, or a lump sum. Then, you can use the money to supplement your retirement income with tax-free funds, fund home improvement projects, cover medical or long-term care needs, establish a line of credit to offset future expenses, or fulfill your dreams of travel.

The amount you may borrow depends on a few factors including your age, your home’s value, the amount of available equity, FHA lending limits, current interest rates, and the reverse mortgage and payment option you choose.

“Reverse mortgages are non-recourse loans,” says Wesley Rice, a Finance of America broker with more than 30 years’ experience in Real Estate Financing. “Meaning you or your heirs will not be responsible for more than what the home is worth. Your home still belongs to you, and you will not lose your home if you stay current on the terms of your loan.”

WESLEY RICE Finance of America (209) 224-3063 FOAMortgage.com